Public VS Private, battle of the constitutional petition for crypto regulation
The Korean government in Dec. 2017 rolled out harsh new regulations against cryptocurrency trades in order to prevent any speculative investment. Investors strongly opposed the government’s move, however, challenging the constitutionality of the regulations and zeroing in on one that requires real-name transactions when trading cryptocurrency. Representing 347 claimants during a Jan. 16 public hearing on the new regulations, attorney Jeong Hee-chan of Anguk Law Offices argued that the Financial Services Commission had infringed on several of his clients’ basic rights with the new cryptocurrency rules. Implementation of the real-name transaction regulations limited investors’ access to trading, Jeong claimed, causing a massive drop in the cryptocurrencies’ value and infringing on investors’ rights to dispose assets. Noting that other assets can be traded anonymously, Jeong added that the regulation infringes on investors’ right to equality and the pursuit of happiness. It also runs contrary to the principal of proportionality, which bans excessive regulations, he said. “Claimants are welcome to regulation on cryptocurrency, but not in this way,” Jeong said. “If people’s financial rights get infringed by a specific department, Financial Services Commission will result in being too influential in the industry.” The real-name transaction regulation that was subsequently implemented in banks in January 2018 was influenced by the government authority as well, he said. Jeong claimed it was illogical to argue that banks voluntarily imposed regulations on themselves that would cut into their profits. “Technically it is political influence in banks,” said Jeong. “When there is no other options but to use local banks, imposing such regulation on banks means that the authority imposed such regulation directly on the people as well.” Representing the Financial Services Commission, attorney Seo Gyu-young argued that the government only took part in related discussions and did not directly influenced people’s rights. He rebutted Jeong’s claim that an exceptional regulation was imposed on cryptocurrency compared to other assets, saying that “there should be a comparative group that falls in the same category as cryptocurrency when making claims, but there isn’t. Cryptocurrency, by law, doesn’t fall under the same category as other assets.” Seo also refuted the claim that the authority imposed a real-name transaction regulation on banks, maintaining that the implementation was carried out voluntarily by the banks. “There were a lot of side effects coming from anonymity when trading cryptocurrency, and financial authorities are obliged to report such suspicious trades or borrowed-name trades,” Seo said. “Financial entities did not realize the severity of the situation at first, but when they noticed how dangerous they were, the banks voluntarily implemented the real-name based transaction regulations.” Seo continued that even if a public authority influenced in the process, it was within an internal process between a regulator and those that are regulated. “It wasn’t directly imposed on the people,” he said. “It is not true that the property right has been infringed, but it is just a loss of opportunity for profit-taking.” The court will decide on the regulation’s constitutionality in the coming months.